In a previous post I wrote about Ole K. Nilssen, who played fast and loose with the U.S. Patent & Trademark Office (PTO) disclosure rules while prosecuting and maintaining some of his 200+ patents directed to compact fluorescent lighting (CFL) technology.  Nilssen’s shenanigans included incorrectly claiming the right to pay reduced fees reserved for small entities, submitting misleading affidavits, and failing to disclose to the PTO then-pending litigation with Motorola on related subject matter.

The inventor’s conduct before the PTO was later deemed inequitable conduct by the district court and the Federal Circuit Court of Appeals (Federal Circuit) (Patent rule 1.56 imposes a duty of candor on the applicant, and patent case law deems such deception and incomplete disclosure of material information during the patent application process “inequitable conduct” that renders any resulting patents unenforceable).

It turns out that Nilssen’s sloppiness before the PTO spilled over to the courtroom and has cost him about $6 million.  Last month the Federal Circuit affirmed a district court decision that Nilssen should pay Osram Sylvania, Inc.’s (Sylvania) attorney fees to cover the cost of the patent infringement suit Nilssen brought against Sylvania. 

Section 285 of the patent laws gives courts the discretion to award reasonable attorney fees to a prevailing party in “exceptional” cases.  Cases may be deemed exceptional based on a number of factors.  Here, the trial court found the case exceptional because of Nilssen’s inequitable conduct, the frivolous nature of the lawsuit, and Nilssen’s litigation misconduct. 

The litigation misconduct before the district court included waiting until very late in the proceedings to withdraw fifteen of the asserted patents from the case, belatedly producing requested documents, listing incorrect patent priority dates in responses to Sylvania’s interrogatories, and waiting until trial to announce that he was waiving the attorney-client privilege to assert reliance on advice of his tax attorney that he was eligible for the reduced small entity maintenance fees.

On appeal, the most important factor was not legal or factual, but simply the way that the appeals court reviews the district court’s findings – the “standard of review.”  The Federal Circuit must uphold a district court’s finding that a case is exceptional unless that finding is “clearly erroneous.”  Similarly, the district court’s decision to award attorney fees must be affirmed unless the lower court abused its discretion in making the award.  

These standards of review, which require the appeals court to be very deferential to the district court’s findings, ultimately sealed Nilssen’s fate.  The Federal Circuit majority stated: 

 Finally, and most importantly, the key to affirmance of the district court in this case is the standard of review – abuse of discretion.  Much is said by this court, and directed to it, concerning the importance of deferring to district court judges on matters assigned to their discretion.  In reviewing such matters, when we find them to be supported by evidence, and not unreasonable, we must, and do, respect their choices.

The Federal Circuit rejected Nilssen’s argument that the inequitable conduct was “benign,” finding no such qualitative distinction among different types of inequitable conduct.  The appeals court also rejected his contention that the various instances of litigation misconduct merely constituted vigorous litigation tactics and harmless oversight of legal formalities. 

The district court was in the best position to decide these issues because it had held a trial on inequitable conduct and had found that, in context, Nilssen’s multiplicity of transgressions amounted to litigation misconduct, and that granting attorney fees was appropriate under the circumstances.  The Federal Circuit concluded there was no clear error in the district court’s decision that the case was exceptional and no abuse of discretion in awarding attorney fees.

Interestingly, Judge Pauline Newman dissented from the majority opinion, stating that precedent compelled the appeals court to examine the egregiousness of the inequitable conduct in reviewing an award of attorney fees.  She noted that, under Federal Circuit precedent not all inequitable conduct warrants such a finding, so there must be a distinction among different types or levels of inequitable conduct:

The panel majority departs from precedent in holding that the nature of ‘inequitable conduct’ is not a factor to be weighed in the attorney fee determination.  The court today enlarges the scope of ‘exceptional case’ to include less than egregious aspects of patent prosecution and litigation practice, with no evidence or charge of bad faith or prejudice . . . It is appropriate and necessary to consider the nature of the conduct, in reviewing an attorney fee award, and to limit such award to major infractions, as statute and precedent require.

But the Federal Circuit’s lesson for Nilssen is clear:  observe the rules of the game both in the PTO and the courts if you want to enforce your patents.

 

California startup BioSolar, Inc. (BioSolar) has a different focus than most companies in the solar industry.  Instead of building better ways to absorb the sun’s rays and convert the light into energy, BioSolar develops cheaper and more environmentally-friendly protective backing for solar cells.

Currently, the vast majority of protective backsheets for solar cells are made by DuPont from a petroleum-based film called Tedlar.  BioSolar’s backing is made from bio-based materials.

BioSolar has a patent application directed to a process for building solar cells using a bio-based plastic substrate.  U.S. Application Pub. No. 2007/0295394 (‘394 application) seeks to overcome the primary problems associated with bio-based materials in solar applications – their relatively low melting points and de-gasing temperature points.

The keys to the process disclosed in the ‘394 application are de-gasing the substrate material at a temperature of 120 degrees so the material maintains its shape without bubbling or cracking and applying a silicon oxide barrier layer to seal the potential micro-cracks and stabilize the substrate for its journey through the remainder of the solar cell production process.

According to this green tech media piece, BioSolar has not disclosed which bio-materials are used to make the substrate.  

The ‘394 application offers one possibility:  the application states that the bio-based substrate “is made from Poly Lactic Acid (PLA); a material generated from corn dextrose…” 

A recent Matter Network story about a New York dry cleaning business caught my attention.  Green Apple Cleaners (Green Apple), which has two locations in Manhattan and a third in Mahwah, New Jersey, uses environmentally-friendly Solvair Cleaning Systems to launder its clients’ clothes. 

The Solvair Cleaning System is owned by Illinois textile cleaning technology company R.R. Street & Co. (RRS) and covered by a family of RRS patents directed to cleaning systems using organic cleaning solvents and a pressurized fluid solvent. 

In the process disclosed by U.S. Patent Nos. 6,355,072, 6,736,859, 6,755,871 and 7,147,670, clothes are cleaned by an organic cleaning solvent in a perforated drum contained within a cleaning vessel, and the used solvent is extracted by rotating the drum at high speed.  The process then departs from conventional cleaning methods by removing residual solvent with a pressurized fluid instead of using an evaporative hot air drying cycle.

This is made possible because the organic cleaning solvent is soluble in the pressurized liquid solvent.  The pressurized fluid solvent is then transferred from the drum, and the vessel is de-pressurized so any remaining pressurized fluid solvent evaporates.  According to the patents, the result is less damage to both the clothes and the environment.

Green Apple also owns a federal registration for the GREEN APPLE CLEANERS mark (greenapplereg.pdf).  Interestingly, Green Apple’s eco-mark sailed through the U.S. Patent & Trademark Office (PTO) in just eight months, avoiding the problems faced by other eco-marks such as GREEN BRANCH .

Presumably, the PTO did not find GREEN APPLE CLEANERS merely descriptive of environmentally-friendly cleaning services because of the presence of the “APPLE” element in the mark.  This offers one lesson for applicants seeking federal registrations for eco-marks containing such eco-descriptive terms as GREEN or CLEAN:  add a non-descriptive, arbitrary word to your mark to spice things up and improve your chances of success in the PTO.

 

A couple of weeks ago, I responded to a first Office Action issued by the U.S. Patent & Trademark Office (PTO) in connection with the trademark application for GREEN PATENT BLOG (see ).  As discussed previously, the trademark examiner rejected the application on the ground that the mark GREEN PATENT BLOG is “merely descriptive” of blogs that provide information on clean tech patents.

Under federal trademark case law a term is merely descriptive if it immediately conveys a significant characteristic of the goods or services for which the mark is being used.  On the other hand, if the consumer has to exercise “mature thought” or follow “a multi-stage reasoning process” to determine the product or service of the mark, then the mark is not merely descriptive. 

My argument in the response (gpbresponse.pdf) hinged on this immediacy requirement and focused primarily on the “green” component of the mark.  Specifically, GPB asserted that the mark does not immediately communicate the subject matter of the services because the term “green” has many meanings in addition to the environmental and clean tech definition, such as relating to plants or as a slang for money or finance.  

Moreover, some of those additional definitions comprise subject matter that, like clean tech, is the stuff of patents.  For example, plant patents are quite prevalent (think Monsanto, genetically-modified crops, etc.).  Financial services patents are common as well.

GPB also argued that determining the services provided under a mark containing “green” together with “patent” requires a reasoning process because most people do not associate “green” characteristics (whether clean tech, money, plants or something else) with intellectual property law.

So advocate turned blogger turned blogger/advocate gave it his best shot.  In another few months, we’ll see how GPB did.

A study by the Heslin Rothenberg law firm shows that the number of clean energy patents granted by the U.S. Patent & Trademark Office (PTO) decreased in the first quarter of 2008.  The newest installment of the firm’s Clean Energy Patent Growth Index (CEPGI), published quarterly, found that 220 clean energy patents were granted in the first quarter of this year, compared to 228 in the first quarter of last year and 227 in the fourth quarter of 2007.  (see the Greentech Media article)

Among the report’s findings are that patents for wind power, tidal/wave power and geothermal energy went up relative to the last quarter, while fuel cell patents, hybrid/electric vehicle patents, biomass/biofuel patents and solar power patents were down.  However, fuel cell technology remained by far the most represented, with 124 patents, or 56% of the clean energy patents granted in the first quarter.  Wind power patents were second with 35 patents granted, with 23 solar patents and 19 hybrid/electric vehicle patents.

The leading clean energy patentee in the first quarter of 2008 was Honda, with 16 patents, followed by General Electric and General Motors, each with 11.  The top ten list includes other automotive companies Nissan, Toyota and Hyundai.

As the Greentech Media piece points out, the CEPGI data may indicate the hot areas of research and development in clean energy but doesn’t necessarily measure innovation or commercial success.  For instance, the article notes that, despite the relative dominance of fuel cell patents, fuel cells are not a particularly lucrative market. 

Another question CEPGI doesn’t answer is why there was a first quarter dip in granted clean energy patents.  Is it due to fewer applications being filed or fewer applications being granted?  Is the PTO become tougher on clean energy patent applications or perhaps tougher in general?  One way to investigate this would be to search the PTO’s published applications database in addition to searching issued patents.  A quarterly tally of the clean energy applications would shed some light on clean energy patent filings and might provide a fuller picture of what is happening in clean energy innovation.

Oerlikon is a Swiss company that makes thin-film solar production equipment.  Oerlikon is the worldwide exclusive licensee of “micromorph” tandem cell technology, which it acquired in 2003 from the University of Neuchatel in Switzerland. 

Micromorph tandem cells have two different silicon materials – amorph and microcrystalline – in a top and a bottom cell.  This setup increases efficiency because the amorphous top cell converts the visible light from the sun while the microcrystalline bottom cell absorbs sunlight in the infrared part of the spectrum.

The technology is covered by a family of patents, including European patent EP 0 871 979 (EP patent) and U.S. Patent No. 6,309,906 (U.S. patent), and generally provides a process for making thin-film solar cells using microcrystalline or nanocrystalline silicon.  As discussed in Oerlikon’s U.S. patent, this patent family addresses some of the problems of thin film solar cell production and facilitates large scale production. 

Last month Oerlikon sued German thin-film solar cell maker Sunfilm AG (Sunfilm) in the German District Court of Dusseldorf (pictured above), alleging infringement of the EP patent.* 

One common method of laying microcrystalline silicon on a substrate to make solar cells is called Chemical Vapor Deposition (CVD) and involves using one or more volatile gases, which react or decompose to deposit the desired material.  CVD often results in defects in the silicon layer, including weak photocurrent and negative “doping.”  (doping means intentionally adding impurities to a semiconductor to increase the number of free charge carriers; the level of doping needs to be controlled to achieve efficient solar cells).  According to the U.S. patent, oxygen is one culprit that can cause flaws in the microcrystalline silicon layer.  Oerlikon’s patented technology overcomes these problems by purifying one of the gases before the silicon deposition step to reduce the oxygen content of the deposition gas. 

One interesting point here is that Oerlikon, a production equipment manufacturer, has not sued a direct competitor in Sunfilm, but has instead sued a competitor’s customer (Sunfilm is a thin film solar cell manufacturer, not a production equipment maker) .

Therefore, this lawsuit has raised the question whether Oerlikon also plans to sue Sunfilm’s supplier, California production equipment maker Applied Materials, Inc. (AMAT) (Sunfilm recently awarded AMAT a contract to supply a second line of manufacturing equipment).  Although Oerlikon denies that it intends to sue AMAT for infringement, AMAT knows it may be in the line of fire and has taken a preemptive step in the court of public opinion.  It has issued a statement defending its manufacturing process and asserting that it does not infringe Oerlikon’s patent.

* Unfortunately, I can’t get a copy of the complaint filed by Oerlikon – a German patent attorney informed me that German court papers are only available upon written request and only if one can demonstrate a special interest in the case.  I also can’t get an English translation of the European patent.  Thus, I will limit my discussion to the U.S. patent (which is a sister application of the EP patent and therefore contains a similar or identical description of the technology).

 

Parker West International, LLC (PWI) is a Santa Rosa, California company that provides environmentally-compliant industrial and commercial cleaning services.  PWI cleans nasty hydrocarbon and metallic contaminants, including oil, grease, heavy metals, diesel fuels and latex paints, using its patented “closed loop” waste treatment system (all contained in the pretty truck pictured above and shown in the drawing below). 

U.S. Patent No. 5,979,012 (‘012 patent) is directed to a mobile waste treatment system including a wastewater treatment unit and a steam cleaning unit.  The system, housed in a truck or trailer, sprays steam onto a contaminated surface.  The steam condenses and emulsifies the surface contaminants, which are vacuumed up in the form of contaminated water and pumped to the steam cleaning unit on the truck and then piped to the wastewater treatment unit.  

The wastewater treatment unit churns the contaminated water with a clay-based flocculant (a chemical that cause particles suspended in solution to come out as flakes).  The sludge that separates out is deposited on a porous cloth on draining trays, and the drained water is re-used in the steam cleaning unit.  An important advantage of this system is that it provides on-site separation of solid and liquid waste, which facilitates environmentally-friendly disposal.

Last month PWI sued Clean Up America, Inc. (CUA), a Virginia-based cleaning equipment maker, in federal court in San Francisco for alleged infringement of the ‘012 patent, breach of contract, fraud and interference with business advantage.  According to the complaint (parkerwestcomplaint.pdf), in 2003 PWI granted CUA a non-exclusive license to use and sell PWI’s patented technology.  CUA was obligated to pay a royalty for such use and sale.  The agreement also gave PWI certain rights to sell its clay-based flocculants to CUA customers.

PWI alleges that CUA owes royalties on products and services it sold under the agreement and that CUA continues to sell and offer products and services that incorporate the technology of the ‘012 patent even though the agreement expired in 2006.  PWI is seeking damages and a court order enjoining CUA from engaging in infringing activity.

The fraud claim asserts, without any factual support, that CUA intentionally misrepresented its intent to pay PWI for use of the patented technology.  The federal rules of civil procedure require that a fraud claim be pleaded with particularity, so this claim could get tossed if PWI doesn’t amend its complaint to provide more detail.